What Happens If an Institute Follows Labor Laws but Skips the Paperwork?

If an institute is complying with all labor laws such as minimum wages, the Maternity Act, the Payment of Wages Act, etc., but is not maintaining the required documents, forms, or registers, what is the likely penalty or liability on the institute?

I am not sure what prompts such a query—whether the convenience of computerized data keeping or some other reason best known to the poster.

Importance of Document Maintenance

Maintenance of documents such as registers and notices prescribed in the rules made under the various labor laws, with up-to-date entries, and production of the same for inspection whenever demanded by the authorities concerned, is also an essential part of legal compliance. Non-compliance would result in prosecution before a court of law and imposition of a fine. The questioner can verify the penal provisions in every such law.

Sir Umakanthan, thank you for the reply. Just one more query - for example, if the institute is asked to produce documents as per the Minimum Wages Act, would the payslips, where the wages are as per the government notification, suffice the requirements?

Dear Friend,

Please go through the State Minimum Wages Rules, and you would find various registers to be maintained such as Muster roll, register of wages, register of deductions, wages slip, etc. In addition, you have to exhibit the abstract of the Act and Rules, the name, and address of the Inspectors for the area, etc.

For many companies, it may not be practical to maintain things such as Combined Muster Roll cum Register of Wages in physical form due to various reasons, such as:

(1) Hundreds or thousands of employees in a single location

(2) Getting the signature of all employees on the register will mean the employee can see the salary of other employees on that page in the register

How is this generally handled? Can smaller companies adopt similar practices?

Thanks.

Compliance with Documentation Requirements

The larger the organization becomes, the bigger the issues to be handled. Just because you have a multitude of employees under a single roof, you cannot expect to be exempted from the provisions of maintaining registers, notices, etc., which are the basic documents for proving the number and names of the people employed. Perhaps the maintenance and production of such documents for inspecting authorities will be dispensed with when the Inspecting Agencies are granted access to your computers where such data is stored by you. Until then, you have to follow the existing manual methods of compliance by creating a separate section for this purpose.

Recent Amendment to the Payment of Wages Act

Regarding your second query, please go through the recent amendment to section 6 of the Payment of Wages Act, 1936.

Thank you for the reply. I understand that no exemption can be expected. However, I was wondering how it is generally handled. You mentioned, "Maybe the maintenance and production of such documents to inspecting authorities are dispensed with when the Inspecting Agencies are empowered access to your computers where such data are stored by you." This is exactly what I am trying to understand. Whether the law allows employers to maintain the registers electronically and if any specific permission is required in such a case. If not, is just a printout kept in a file sufficient?

Regarding the second query, the amendment refers to options of payment by cheque/bank transfer. So if payment is made directly to the bank account of the employee, does that mean the employer is not required to get the employees' signature in the Form T - Combined Muster Roll cum Register of Wages according to the current law?

Thanks.